Friday, March 22, 2013

JUNE 30, 1812 – FIRST US TREASURY NOTES AUTHORIZED BY THE UNITED STATES

1812 – FIRST US TREASURY NOTES AUTHORIZED BY THE UNITED STATES
Treasury notes are promise to pay notes to borrowers to raise revenue. The US needed funds
to fund the War of 1812. Rather than print US money (such as “Continentals” –
an interest- and debt-free money issued by the Continental Congress to pay for
the Revolutionary War), the US government followed a different course – to
issue notes to borrowers with promises to pay the principal with interest at a
later date. The original interest rate was 5.4%. Wars cause indebtedness.
Bankers tend to like wars since they tend to create financial dependency of
nations to bankers. Thomas Edison would later say about Treasury bonds, “If our
nation can issue a dollar bond, it can issue a dollar bill. The element that
makes the bond good makes the bill good...”